First things first: Get your paperwork organised

Lenders will need to see various documents. Get your paperwork together in advance. This will help speed up the process as the lender will have everything they require to assess your application.

Lenders will not accept photographs, screenshots, or summaries of the required documents. Everything must be saved as PDF, and reflect the formal document. Become familiar with a scanning app on your phone or ensure that online portals are active so you can download the relevant items from the respective websites.

Check that all documents show the correct address at the time of application. If not, update the provider to avoid problems that could result in delays. DVLA and financial organisations can take several weeks to update their records.

Your required documents

• Passport
• Driver’s licence showing your current address
• Utility bill dated within last three months
• If employed; your last three months’ payslips and P60
• If self-employed; your latest two years’ tax calculations and tax overviews, along with two years’ Ltd Company accounts, if applicable
• Most recent three months bank statements

There may be additional documents depending on your circumstances, but a ChoiceMortgages UK Ltd advisor will be happy to assist you during a consultation.

Register on the electoral roll

This is the quickest and easiest part of preparing for a mortgage application. Being on the electoral roll at your current address is important because lenders often use the electoral roll data to help identify you. Being on the electoral roll will also help your credit profile.

If you’re not currently registered, you can do so here.

Don’t touch your overdraft

Constantly being in your overdraft may raise red flags for lenders. Try to avoid using your overdraft three months prior to an application, or at least ensure you remain within an agreed limit.

Stop applying for credit

Try to avoid applying for credit in the three months before getting a mortgage – it could impact your credit score. Taking out new loans or increasing your credit card balances will likely reduce the amount you can borrow. 

If you need to apply for credit, it’s unlikely that one application will hurt that much, as long as it’s affordable. But if it’s a payday loan or revolving credit facility, some lenders will decline your mortgage application.

It’s also strongly advised to avoid new credit between your mortgage offer being issued and completing your new home. If you do, you will need to inform the lender, which could result in them changing the amount they’re prepared to lend you.

Manage your payments and spending

If you have an existing credit card or loan, it’s important you keep up with the minimum repayments and try not to get too close to your credit limit. Missed or defaulted payments, County Court Judgements (CCJs), payday loans, and clear betting patterns on your bank statements can all lower your chances of getting a mortgage. If you have dormant accounts, consider closing them by contacting the provider. 

It’s always worth adding to your savings if you can, even while you’re still looking for a property. Although gifts from the family will be considered, personal savings need to be evidenced, and lenders want to see an accumulation of funds.

Bear in mind that there could be other fees to consider when buying a new home, such as legal fees, stamp duty, survey fees, and administration fees. Remember to take these into account when working out your overall budget.

Check (and maintain) your credit report before you apply

Lenders want to see that you’re able to manage your finances before they decide to offer you a mortgage. One way they do this is by checking your credit file to see if you have a good payment history.

Your credit file lists your current and previous credit cards, loans, overdrafts, mortgages, mobile phone bills, and utility payments, going back over the last six years. There are three main credit reference agencies in the UK, and several companies offer ways for you to see your report and score for free. You can get a view of your profile before applying using this tool.

If you think your credit file information is wrong, you can raise a dispute to get it corrected. Contact the company that registered the error on your credit file, or request that the credit bureau agency query it.

People who are financially linked to you could affect your credit score

You can become financially linked, or associated, with someone if you take out or apply for joint credit, such as a bank account, mortgage, or loan. Because there is a link, lenders will consider the other person’s credit history when you apply for your new mortgage. Any missed payments or defaults they have could impact your chances of being approved.

If you no longer have a relationship with them, make sure you’ve closed or had your name removed from any joint accounts so you’re not linked to them financially going forward.

It’s also worth writing to the credit agencies and asking for a notice of ‘disassociation’.

At ChoiceMortgages UK Ltd, we pride ourselves on providing a dedicated, personal service to our clients. It’s more than a business transaction, it’s a means to make life dreams come true. We understand that these processes can be overwhelming but we’re here to help, every step of the way.

Get in touch for a free consultation.

The post How to prepare for a mortgage application appeared first on ChoiceMortgages UK Ltd.

A trusted mortgage advisor has the experience and expertise to guide you through the process of buying property in such a way that it saves you time, money, and unnecessary stress.

Securing the best deal

Once your offer to purchase has been accepted, the mission of getting the best loan begins. As an individual, it can be very hard to secure an appointment with a potential mortgage provider. The waiting period for an appointment alone can be anything from seven to 14 days. So you can imagine the challenge when you want to consult with multiple lenders. Property buying is extremely time-sensitive, so you won’t have much time to play around with. 

A mortgage advisor replaces the need for clients to approach lenders directly, and you can secure an appointment a lot quicker, typically within 24 hours. What’s more, the process is in their hands, while you, as the client, will get updates throughout. 

The core role of a mortgage advisor is to find you the most competitive product and favourable terms based on your unique financial position. Key to note here is that independent mortgage advisors are well-placed to access all lenders simultaneously, foregoing the need for multiple, separate appointments.

Furthermore, they are well-versed in fees, rates, products, and lending criteria, therefore are better able to source the most competitive product. Put simply, they know what to look out for.

Full transparency

In all the excitement of an accepted offer to purchase, you could easily lose sight of all the ‘hidden’ costs associated with buying a property. When you’ve got a mortgage advisor on board, you can rest assured that you’ll be aware of every single fee expected from you as the home buyer. This includes legal fees, valuation fees and application fees, among others. 

You’ll also discover that there are so many technical terms and jargon, which could easily overwhelm you – and for that, mortgage advisors are a particularly valuable resource to have.

You can’t put a price on time

Because mortgage advisors have been facilitating home sales professionally for years, they are extremely thorough with the steps and processes involved. Besides the assurance of having all your boxes ticked, their services can save you plenty of time. Home sales are often marred by all kinds of administrative delays, all the while pushing your move date further out. But with mortgage advisors’ relationships and expertise that we’ve mentioned above, they’re often in a good position to expedite certain aspects. 

In addition, there are all those little things that need to get done, like phone calls, emails, follow-ups, etc. It’s those little things that sneakily thieve your time, but they all form part and parcel of mortgage advisory services. Money can be made, saved, or borrowed, but nothing can ever get your time back. And in our opinion, leaving the work in the hands of a capable mortgage advisor is a pretty good way of trying.

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Current trends and predictions

In 2023, UK mortgage lending experienced a significant downturn, with a staggering 23% decrease. As we move through 2024, projections suggest an additional 8% decline, signalling a challenging period for the industry. This decline is expected to continue until a modest recovery in 2025, when figures may return to mid-2010 levels, ranging between £120-130 billion.

Factors influencing the decline

Affordability challenges

Affordability remains a primary concern driving the decline in mortgage lending. Factors such as higher interest rates, elevated house prices relative to income, and increased cost-of-living expenses have created a constrained borrowing environment for prospective homeowners. The current Bank of England base rate is 5.25%. 

In navigating these challenges, individuals and families can benefit from partnering with ChoiceMortgages UK Ltd UK, an independent mortgage broker committed to offering tailored solutions and accessible support. Additionally, ChoiceMortgages UK Ltd has over 30 years of experience with finding clients the perfect mortgages, taking into account their financial well-being and the current market conditions.

Uncertainty ahead

The prospect of a general election before 28 January 2025 adds further uncertainty to the housing market. Historically, such events have prompted a temporary pause as buyers and sellers await clarity on how political changes might impact the economy and property values.

Transaction volumes

The impact of affordability challenges and uncertainty is reflected in transaction volumes, which are predicted to hover around 1 million in 2023, 2024, and 2025. This represents a 15% decline compared to pre-Covid averages.

For those entering into a property transaction, ChoiceMortgages UK Ltd UK’s team of experienced advisers stands ready to address both straightforward and complex queries, ensuring a seamless process tailored to your individual needs. ChoiceMortgages UK Ltd will get to know you and understand your requirements. 

Also, you won’t have to deal with lots of different people and departments – you’ll get a same-day response whether it’s answering a call, responding to your email, or inviting you to leave a detailed message. 

Expert perspectives

Despite these challenges, Emma Cox, managing director of real estate at specialist lending bank Shawbrook, has a positive outlook for the year ahead, referring to the dip in residential property transactions as, “a minor speed bump in an otherwise positive start to the year.”

Furthermore, James Tatch, Head of Analytics at UK Finance, acknowledges the difficulties faced by mortgage borrowers and anticipates a gradual improvement in affordability by 2025.
Remaining with a bright outlook, Lucian Cook, Head of Residential Research at Savills, highlights the stabilising effect of falling inflation on mortgage rates, suggesting that the housing market may have passed its peak difficulties.

Looking into the future

As we forge forward, it’s vital to stay informed and seek expert advice. ChoiceMortgages UK Ltd UK offers free consultations, flexible communication options, and access to a wide range of lenders, ensuring unbiased and personalised solutions for every client.

So, while challenges persist, proactive decision-making and strategic partnerships can help you to navigate the real estate market with confidence. For reliable guidance and support, trust ChoiceMortgages UK Ltd UK to help you find the right mortgage solution.

The post The Evolution of Mortgage Lending in 2024 appeared first on ChoiceMortgages UK Ltd.

Lucky for you, there’s a whole profession dedicated to doing just that for potential homebuyers. Mortgage advisers act as middle people between buyers, lenders, and estate agents to ensure that the most favorable conditions are achieved in order to secure the funds for your dream home. Their work in the home-buying process can be invaluable and can save you thousands in the long run.

But what and how do mortgage advisers charge?

Your mortgage adviser could either charge a flat service fee charged to the borrower (you), or a commission fee charged to the lender (the bank). In certain cases, advisers may earn fees from both parties. The current average mortgage adviser fee is anything between £400 – £700. The rule of thumb is that mortgage adviser fees should hover between 0.3% – 1% of the total loan amount, and they should never exceed 1%. 

It’s important to note, though, that fee structures may vary depending on the complexity of each case.

However your mortgage adviser chooses to charge, it’s the costs in the long run that will add the most value to you as the homebuyer. These are some of the major perks of enlisting the services of a mortgage adviser.

A broader view of the lending landscape

If your mortgage adviser is worth their salt, they will have the best current knowledge on trends, varying rates, and potentially unfair payment terms. Sure, you could do the research yourself, but remember this is a subject-matter expert. In addition, consider the time you’d spend on conducting this research yourself, given the broad lending market in the UK. You may even struggle to get an appointment with the banks or building societies in question. Your mortgage adviser, if independent will have all at their disposal.

Existing relationships with lenders

Mortgage advisers are in the unique position to have good relationships with various lenders, making it easier for them to shop around and obtain the best rates on the buyer’s behalf. Some institutions also only work with mortgage advisers rather than directly with the borrower, so by having this taken care of by a mortgage adviser, you’re widening the pool of lending options. They will also be best placed to identify specific lenders for specific situations. They understand the lending criteria for each respective lender and whether you will be eligible.

The objective: save money

Ultimately, your mortgage adviser’s most obvious indicator is their ability to save you money. The two factors mentioned above make it possible for them to secure the best deal at the best rates. What’s more, you’ll be saving heaps of time and unnecessary stress, too.

It’s in the name

Remember, mortgage advisers, are there to advise. It’s their job to protect you from any mistakes and bad decisions and to steer you in the right direction throughout the purchase process. With all the excitement alongside the anxiety that comes with buying a new home, it can be very easy to get caught up in it all. Rely on the help and support of a trustworthy mortgage adviser to tick all the boxes you may miss. 

Sure, saving money might be the biggest motivator for enlisting the services of a mortgage adviser, but you’ll find that the benefits go well beyond that. 

So, what’s the true cost of a mortgage adviser? If you ask us, it’s peace of mind.

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However, in 2018, the government announced that the scheme would end in March 2023 – for good. While this means critical deadlines are looming, ChoiceMortgages UK Ltd are here to help you navigate the process to ensure you can still benefit from the scheme. 

How does Help To Buy work?

In order to qualify for a Help to Buy equity loan, the property must be a new build sold by a registered Help to Buy developer, and, importantly, it only applies to first-time buyers. Property price limits are in place, and these vary by region. 

The initial requirement from you is to pay a deposit of at least 5% of the property purchase price, with you being able to borrow up to 20% by way of an equity loan. The remaining amount is funded by way of a mortgage.

There is no interest on the equity loan for the first 5 years, but once it kicks in – you will be charged a rate of 1.75% in the sixth year, which increases at each anniversary

Key dates to note

While this is the final season of the Help to Buy scheme, applications are still open for prospective first-time home buyers. These are the important dates to bear in mind and plan around:

Equity loan applications deadline: 31 October 2022 

Practical completion deadline: 31 December 2022. Note that this means the home builder should have completed work on your property such that it is ready to move into, with the new-home warranty in place. 

Scheme end date: 31 March 2023. By this time, you should have completed all the outstanding legal requirements for purchasing your home, and received the keys. It is your responsibility to make sure this happens, and funds will be withheld should you not meet this criteria. This date, however, has no bearing on your loan – your repayments will continue for the term of your loan.  

What to do if you’re in the process of building your home

Since the Help to Buy scheme only applies to properties sold by registered Help to Buy homebuilders, they should be aware of the key dates mentioned above. In fact, they communicate directly with the scheme with regards to which homes will meet the 31 March 2023 legal completion date, so it is highly unlikely that these deadlines will be missed.

Despite this, it is important to maintain full transparency and open communication with your homebuilder to ensure that your deadlines are met. 

Should you find yourself in a position where your homebuilder is unable to complete all the requirements on time, you’re eligible to receive your reservation fee and any deposits in full. 

We are here to help

If you are relying on the assistance of a Help to Buy: Equity Loan in order to make your dream first home a reality, the pressure is on to make it happen faster than you may have planned. 

It’s easy to be overwhelmed when faced with such a major life event, but you don’t have to go at it on your own. ChoiceMortgages UK Ltd is proud to have supported many clients with the Help to Buy scheme. Our years of experience in the industry will ensure you achieve the dream of owning your first home.

The post Help To Buy Equity Loans: What you need to know before the scheme ends for good appeared first on ChoiceMortgages UK Ltd.